Coca-Cola HBC AG (LON:CCH) has revealed plans to pay a bumper special dividend as the drinks bottler toasted a sparkling start to the year and “good progress” towards its medium-term growth targets.
The FTSE 100 group, which bottles and distributes fizzy drinks, juice, water, tea and coffee across 28 countries, has proposed a special dividend of €2 per share, equating to a total of roughly €730mln.
At its 31 December year end, there was just over €712mln cash in the coffers after generating free cash flow of €370mln, while group net debt stood at €613.3mln. Last month the group increased its revolving bank facility to €800mln, which can be used for general corporate purposes.
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Chief executive Zoran Bogdanovic said the proposed dividend was “reflecting successive years of strong performance, confidence in the future and our commitment to creating value for our shareholders”. The decision, which follows a €0.57 ordinary payout for the 2018 financial year, took into account “our strong cash position and financing plans”.
Coca-Cola Hellenic started the year well enough, with revenue in the first quarter of €1.4bn up 4.7% on a currency neutral basis as drink volumes increased 3.5% to 468.7mln cases in spite of a 0.9% impact from a later Easter than last year. City analysts had pencilled in 4.6% sales growth and volumes to be up 3.1%.
Volume growth was led by 5.7% growth in the emerging markets division, where Nigeria was “encouraging” and Russia, Romania and Ukraine continued to fizz merrily. Established markets were up only 0.2% and developing markets 2.6%, both slightly weaker than consensus forecasts of 0.5% and 2.8%.
Bogdanovic also hailed ongoing revenue growth management initiatives that he said continued to deliver improvements in price/mix.
“This good start sets us up well to deliver on our plans and make 2019 another year in which we achieve FX-neutral revenue growth above our targeted range with another step up in margins,” he said.
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The date of the special dividend payment will be set out in the notice of the annual shareholder meeting, which will be sent to shareholders later in the month.
An initial thought by analysts at Jefferies suggested the special divi "may raise concerns on deals".
Shore Capital noted that the consensus of analyst forecasts points to full-year volume growth of 2.3%, implying 5.2% of constant currency revenue growth, while EBIT margin is forecast to increase 50 basus points to 10.7%, giving consensus earnings per share of €1.42.
Shares in CCH, recently approaching last year's all-time high, were up 0.6% to 2,740p on Thursday morning.
-- Adds broker comment, detail on bank facility --